S&P cuts ratings on Irish banks; Anglo deemed junk

A taxi driver protests as he drives past the offices of the Irish Prime Minister Brian Cowen, Dublin, Ireland, Wednesday, Nov. 24, 2010. (The Irish government has unveiled a range of tough austerity measures designed to help solve the country's debt crisis, among the spending cuts and tax rises ar

/ AP

A taxi driver protests as he drives past the offices of the Irish Prime Minister Brian Cowen, Dublin, Ireland, Wednesday, Nov. 24, 2010. (The Irish government has unveiled a range of tough austerity measures designed to help solve the country's debt crisis, among the spending cuts and tax rises are a reduction in the minimum wage, a new property tax and thousands of public sector job cuts. The four-year plan is designed to save the state 15 billion euro ($20bn; £13bn). The government is also negotiating a bail-out package with the EU and IMF, expected to be worth about 85 billion euro. (AP Photo/Peter Morrison)

A taxi driver protests as he drives past the offices of the Irish Prime Minister Brian Cowen, Dublin, Ireland, Wednesday, Nov. 24, 2010. (The Irish government has unveiled a range of tough austerity measures designed to help solve the country's debt crisis, among the spending cuts and tax rises are a reduction in the minimum wage, a new property tax and thousands of public sector job cuts. The four-year plan is designed to save the state 15 billion euro ($20bn; £13bn). The government is also negotiating a bail-out package with the EU and IMF, expected to be worth about 85 billion euro. (AP Photo/Peter Morrison) (/ AP)

SHAWN POGATCHNIK, Associated Press

The Standard & Poor's credit ratings agency downgrades Ireland's banks as speculation mounts that an EU-IMF bailout of Ireland could require senior bondholders to help cover the losses.

New York-based S&P said in a statement Friday it was lowering Anglo Irish Bank six notches to a junk-bond B grade. It also cut the ratings on Bank of Ireland and Allied Irish Banks one notch each to BBB+ and BBB, respectively.

The agency says bonds issued by Anglo are particularly at risk of being discounted as part of the EU-IMF rescue mission to Dublin. It says Ireland "may be forced to reconsider its current supportive stance toward Anglo's unguaranteed debt."

Junior bondholders at Anglo already have been forced to accept losses of 80 percent to 95 percent on their loans.